What's Your Credit Card Rewards Strategy?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
ImmigrantSaver
Posts: 337
Joined: Tue Nov 22, 2016 6:24 pm

Re: What's Your Credit Card Rewards Strategy?

Post by ImmigrantSaver »

ZinCO wrote: Sat Oct 03, 2020 9:59 am
ImmigrantSaver wrote: Sat Oct 03, 2020 9:14 am Yes, already used up most of points that way. Didn’t realize pay yourself back was only for CSR but it’s ok I’ll just collect points for now. Thanks!
Sorry, I should have been more clear. PYB is available for the CSP and Freedom, but at lower redemption values or fewer categories. You will lose access to PYB as you know it.
Oh I see. That's good to know, thanks!
WolfgangPauli
Posts: 400
Joined: Sun Aug 23, 2015 8:28 am

Re: What's Your Credit Card Rewards Strategy?

Post by WolfgangPauli »

Workaholic wrote: Sat Aug 29, 2020 9:06 am
WolfgangPauli wrote: Sat Aug 29, 2020 8:08 am I dislike any "points" type card and will only do cash back. I know the value of cash but as we have learned during the pandemic, points values can be very fickle.

I have a 2.5% cash back card which pays 2.5% on every purchase made regardless of where or what. I pay it off every month and my monthly living expenses are about $4K. I put everything I can on the card (unless the payer charges a fee like the government with property taxes etc.). This accomplishes two things:

1. It is just like having a $4K CD paying 2.5%.
2. Gives me a 100% record at the end of the year where all my expenses went.
What cash back card do you have giving 2.5%? Just curious but normally the best cash back cards only pay 2% that I've seen.

"Points" values can vary and change but a transferrable currency such as Chase UR or Amex MR have a minimum value per point.
USAA ... I have had it for years but I am not sure they offer it to new card holders anymore. It is like clockwork, automatically every month they pay out the money into my USAA checking account. Only requirement was to have a direct deposit of $1K per month into checking which, within days of the $1K being deposited, I automatically move it to Ally.
Twitter: @JAXbogleheads | EM: JAXbogleheads@gmail.com
protagonist
Posts: 6762
Joined: Sun Dec 26, 2010 12:47 pm

Re: What's Your Credit Card Rewards Strategy?

Post by protagonist »

TresBelle65 wrote: Fri Oct 02, 2020 7:34 am - 5.25% on dining/bars
- 5.25% on travel
- 5.25% on online
- 3.5% on groceries (including Costco!)
- 2.625% on everything else (and no international fee)



I can get these cash back rates on the Bank of America Cash Rewards card? If that it is the correct name of the card, I need to get it right away. Thanks
I have a large amount of CDs maturing within the next few months. I would apply for that card and the investment bonus if they offered any safe way to invest the cash at even over 1% APY guaranteed. But in lieu of that I can do better, even with online banking.
protagonist
Posts: 6762
Joined: Sun Dec 26, 2010 12:47 pm

Re: What's Your Credit Card Rewards Strategy?

Post by protagonist »

lakpr wrote: Thu Oct 01, 2020 5:06 pm
protagonist wrote: Thu Oct 01, 2020 3:01 pm Two possible approaches to buying groceries if you have CSR and just got Freedom Flex (and already have a lot of UR points):
1. Use Flex, get 5% back on groceries now, then transfer points to CSR and use CSR Pay Yourself Back for future dining expenses at 7.5% (but option only exists until April).
2. Use CSR initially when buying groceries, getting 1%, and pay yourself back for the groceries at 1.5% with excess points accumulated elsewhere. ("Bird in the hand" approach since Pay Yourself Back is due to expire in April).

What do you do?
depends on the amount of "lot of UR points". I am in the exact situation as you describe, with about 250k UR points. At a 1.5 cents PYB redemption, that's worth about $3800. My monthly grocery bills run about $400 to $500 per month for a family of four (especially since we have stopped dining out, working from home, cooking from home ...it used to be $800 per month earlier). So that's 7 months of groceries in UR redemptions, just about the time the PYB redemption expires (and annual fee due in March).

For now, I am choosing option-2. My eventual plan is to cancel CSR, I really don't see myself or my family traveling or dining out. We would have cashed out even at 1 cent per UR, so the initial PYB redemption and the extension came as a god-send.
I'm using Flex for groceries and Sapphire Reserve for dining (will use Pay Yourself Back). I will transfer Flex points to CSR. So far I have paid myself back with about 150K UR points June-September ....I still have about 425K UR points.
deanmoriarty
Posts: 356
Joined: Tue Jan 28, 2014 1:19 am

Re: What's Your Credit Card Rewards Strategy?

Post by deanmoriarty »

protagonist wrote: Sun Oct 04, 2020 4:54 pm
TresBelle65 wrote: Fri Oct 02, 2020 7:34 am - 5.25% on dining/bars
- 5.25% on travel
- 5.25% on online
- 3.5% on groceries (including Costco!)
- 2.625% on everything else (and no international fee)



I can get these cash back rates on the Bank of America Cash Rewards card? If that it is the correct name of the card, I need to get it right away. Thanks
I have a large amount of CDs maturing within the next few months. I would apply for that card and the investment bonus if they offered any safe way to invest the cash at even over 1% APY guaranteed. But in lieu of that I can do better, even with online banking.
You don’t have to keep cash at BofA. You can transfer $100k worth of ETFs, which most bogleheads have, and get those benefits. I have $150k in VTI at BofA, and that’s how I achieve my preferred status. My cash is held at Marcus.
tj
Posts: 3683
Joined: Thu Dec 24, 2009 12:10 am

Re: What's Your Credit Card Rewards Strategy?

Post by tj »

protagonist wrote: Sun Oct 04, 2020 4:54 pm
TresBelle65 wrote: Fri Oct 02, 2020 7:34 am - 5.25% on dining/bars
- 5.25% on travel
- 5.25% on online
- 3.5% on groceries (including Costco!)
- 2.625% on everything else (and no international fee)



I can get these cash back rates on the Bank of America Cash Rewards card? If that it is the correct name of the card, I need to get it right away. Thanks
I have a large amount of CDs maturing within the next few months. I would apply for that card and the investment bonus if they offered any safe way to invest the cash at even over 1% APY guaranteed. But in lieu of that I can do better, even with online banking.
It makes no sense to use BofA/Merrill for cash. Transfer ETFs or mutual funds.
Horsefly
Posts: 616
Joined: Sat Oct 24, 2015 8:13 am
Location: Colorado, mostly

Re: What's Your Credit Card Rewards Strategy?

Post by Horsefly »

Some time ago there was a discussion here (maybe in this thread but maybe not) regarding what a retiree can and should put down for annual income on a credit card application. I recall opinions were split: Many thought that you should only put what your real income is, while others thought you should put down what would conform to a 3-4% SWR from assets. It seemed like an important discussion, since many of us have very little real income but a big nest egg to draw from.

Yesterday I had an experience that seemed to answer the question. I had applied for the new Chase Freedom Flex, but got a letter from them a few days later saying that I needed to call them before they could make a decision. I had forgotten to unfreeze my credit report :oops: , which was the main thing I had to fix. I also had maxed out the total credit limit on my other Chase cards, so they needed to ask me how to redistribute my credit limits.

The interesting thing was when she asked me to verify my annual income. I decided that I would just be honest with her: It wouldn't bother me all that much if they decided to turn me down for this card, as I already have several. I told her that it depended on how they counted it. I explained that I have a small pension (~30K/yr), but that I have a substantial retirement nest egg which would allow me to take out much more than that annually for as long as I live. She literally said "let's use that number then". So I gave her a pretty large number, that I know to be around a 2.5% withdrawal rate. She didn't ask me for any details about how much I had in investments, or how I arrived at the number. She just plugged it in and after a couple of minutes on hold she said I was approved.

There are probably a couple of possibilities here. It could be that they are somewhat used to this discussion as they deal with retirees. It may even be in their script. On the other hand it may be that they don't really care how I come up with the number, and the rep is expected to give some value judgement on me and how I answered the question. Either way, I now have over $80K of credit limit with Chase (over $90K if you count my business card), and I'm sure I wouldn't get those limits if they only looked at my pension income.
Leesbro63
Posts: 6809
Joined: Mon Nov 08, 2010 4:36 pm

Re: What's Your Credit Card Rewards Strategy?

Post by Leesbro63 »

Horsefly wrote: Fri Oct 16, 2020 8:48 am Some time ago there was a discussion here (maybe in this thread but maybe not) regarding what a retiree can and should put down for annual income on a credit card application. I recall opinions were split: Many thought that you should only put what your real income is, while others thought you should put down what would conform to a 3-4% SWR from assets. It seemed like an important discussion, since many of us have very little real income but a big nest egg to draw from.

Yesterday I had an experience that seemed to answer the question. I had applied for the new Chase Freedom Flex, but got a letter from them a few days later saying that I needed to call them before they could make a decision. I had forgotten to unfreeze my credit report :oops: , which was the main thing I had to fix. I also had maxed out the total credit limit on my other Chase cards, so they needed to ask me how to redistribute my credit limits.

The interesting thing was when she asked me to verify my annual income. I decided that I would just be honest with her: It wouldn't bother me all that much if they decided to turn me down for this card, as I already have several. I told her that it depended on how they counted it. I explained that I have a small pension (~30K/yr), but that I have a substantial retirement nest egg which would allow me to take out much more than that annually for as long as I live. She literally said "let's use that number then". So I gave her a pretty large number, that I know to be around a 2.5% withdrawal rate. She didn't ask me for any details about how much I had in investments, or how I arrived at the number. She just plugged it in and after a couple of minutes on hold she said I was approved.

There are probably a couple of possibilities here. It could be that they are somewhat used to this discussion as they deal with retirees. It may even be in their script. On the other hand it may be that they don't really care how I come up with the number, and the rep is expected to give some value judgement on me and how I answered the question. Either way, I now have over $80K of credit limit with Chase (over $90K if you count my business card), and I'm sure I wouldn't get those limits if they only looked at my pension income.
I would NEVER do this. To me it's fraud. If you have $5M in a taxable account generating no dividends or interest, and nothing else, you legally have zero income. Even if you withdraw from this account, it's still not income. The exception would be, I guess, to whatever extent you report capital gains, that would be income.

On the other hand, if you have only $5M in an IRA and are beyond age 72, then I'd have no trouble using the RMD as my legal income, because that's how the tax man defines income. I think I'd even be OK if you withdrew MORE than the RMD as counting that "more amount" as income because, again, that's how the taxman does it. Even Roth IRA withdrawals, I think can be counted as legal income, although it's not taxable income.

On the other side of this mental and legal accounting dance, there are many of us who reinvest taxable dividends and interest, but don't consider it to be truly spendable income. Yet for purposes of applying for a loan/credit card, I'd have no trouble using this amount for the same reason as above...it's legally income.

Bottom line is that withdrawing arbitrarily from a pool of non-tax sheltered assets isn't really income.

No one cares how you obtain the credit as long as you pay as agreed, and the stuff will probably never be reviewed again. But if something goes wrong (you get into financial trouble and don't pay), they can and probably will review the entire application carefully and can use what you say to convince a judge or jury that you committed bank fraud.
fuddbogle
Posts: 58
Joined: Fri Jun 21, 2019 8:35 am

Re: What's Your Credit Card Rewards Strategy?

Post by fuddbogle »

Leesbro63 wrote: Fri Oct 16, 2020 10:01 am But if something goes wrong (you get into financial trouble and don't pay), they can and probably will review the entire application carefully and can use what you say to convince a judge or jury that you committed bank fraud.
Won't happen and would never fly as fraud. A good faith estimate is not fraud.
Leesbro63
Posts: 6809
Joined: Mon Nov 08, 2010 4:36 pm

Re: What's Your Credit Card Rewards Strategy?

Post by Leesbro63 »

fuddbogle wrote: Fri Oct 16, 2020 10:25 am
Leesbro63 wrote: Fri Oct 16, 2020 10:01 am But if something goes wrong (you get into financial trouble and don't pay), they can and probably will review the entire application carefully and can use what you say to convince a judge or jury that you committed bank fraud.
Won't happen and would never fly as fraud. A good faith estimate is not fraud.
Fair enough I think. To be the devil's advocate against my own position (and to agree with you), if you have $5M and no income, but told a credit card company you had a $200,000 "income", I guess you can make a reasonable case.

Maybe it's not as strict as my original thinking. Thanks for the thought exercise here.
fuddbogle
Posts: 58
Joined: Fri Jun 21, 2019 8:35 am

Re: What's Your Credit Card Rewards Strategy?

Post by fuddbogle »

Here's more - from first page summary.

The final rule amends Regulation Z to remove the requirement that issuers consider the consumer’s independent ability to pay for applicants who are 21 or older, and permits issuers to consider income and assets to which such consumers have a reasonable expectation of access.

Just be honest with what you could reasonably use and you'll be fine (legally).

https://files.consumerfinance.gov/f/201 ... l-rule.pdf
TravelGeek
Posts: 3835
Joined: Sat Oct 25, 2014 3:23 pm

Re: What's Your Credit Card Rewards Strategy?

Post by TravelGeek »

Leesbro63 wrote: Fri Oct 16, 2020 10:01 am
I would NEVER do this. To me it's fraud. If you have $5M in a taxable account generating no dividends or interest, and nothing else, you legally have zero income. Even if you withdraw from this account, it's still not income. The exception would be, I guess, to whatever extent you report capital gains, that would be income.
I have generally been in the “I report whatever income appears on my tax return” because that is clearly defendable with a piece of paper if Chase or Amex want to do a financial review. It also has been “enough” for my needs.

But your example raises an interesting point that shows how silly this can be. Assume I have two lots of the same stock in my taxable account. Each lot is currently worth $100k. Selling the first lot triggers capital gains, and selling the other one doesn’t due to its higher purchase price.

So to fund my retirement, I can either create $100k in income by selling the lot that has cap gains, or I can create $0 of income.

On the other hand, it makes no sense to just add up all withdrawals (sells) either since I could quickly churn myself to “millionaire earner” :)
Leesbro63
Posts: 6809
Joined: Mon Nov 08, 2010 4:36 pm

Re: What's Your Credit Card Rewards Strategy?

Post by Leesbro63 »

TravelGeek wrote: Fri Oct 16, 2020 10:53 am
Leesbro63 wrote: Fri Oct 16, 2020 10:01 am
I would NEVER do this. To me it's fraud. If you have $5M in a taxable account generating no dividends or interest, and nothing else, you legally have zero income. Even if you withdraw from this account, it's still not income. The exception would be, I guess, to whatever extent you report capital gains, that would be income.
I have generally been in the “I report whatever income appears on my tax return” because that is clearly defendable with a piece of paper if Chase or Amex want to do a financial review.

But your example raises an interesting point that shows how silly this can be. Assume I have two lots of the same stock in my taxable account. Each lot is currently worth $100k. Selling the first lot triggers capital gains, and selling the other one doesn’t due to its higher purchase price.

So to fund my retirement, I can either create $100k in income by selling the lot that has cap gains, or I can create $0 of income.

On the other hand, it makes no sense to just add up all withdrawals (sells) either since I could quickly churn myself to “millionaire earner” :)

To amend my earlier thinking...as I've had more time to ponder this...I think if you report an "income" that is a low fraction of your nest egg..."low SWR"...say 4% or even 5% or lower, a judge or jury could be probably be persuaded to agree that you have created your own income pension and did not make misleading claims in order to obtain bank credit. I'm not a lawyer or accountant, so don't rely on me. But I'm just trying to think-out some common sense here as to what the right thing to do would be and what would happen if things went badly.

As a practical matter, most $5M taxable portfolios throw off at least 2% (in reportable but not necessarily taxable) dividends and interest anyway.
j0nnyg1984
Posts: 752
Joined: Sun Apr 24, 2016 9:55 am

Re: What's Your Credit Card Rewards Strategy?

Post by j0nnyg1984 »

MilleniumBuc wrote: Thu Sep 03, 2020 2:16 pmNot sure about the original message, but for me my local credit union changed from 1.5% cash back to 2.5% cash back about two months ago as a new normal (not a limited time promo), so I have been using it for everything until they realize it’s too much to bear. I have read of a few other credit unions doing the same, but with limited time promotions and certain accounts with them. The one I’m using it’s no fee as well.
( https://www.midflorida.com/loans-and-mo ... signature/ )

ETA: And it’s not like the Citi Double Cash where you get 1% at purchase and 1% once you pay it, they just add the 2.5% as each transaction posts, instead of waiting for the statement to close (probably something they might change in the future).

Man, I’m really considering this. I currently have the BoA PR with the highest tier bonus, so 2.625% on all purchases, but it has an annual fee, and my company started issuing Corp cards this year so I lost 95% of my spend...

Thanks for the link.
Seasonal
Posts: 2141
Joined: Sun May 21, 2017 1:49 pm

Re: What's Your Credit Card Rewards Strategy?

Post by Seasonal »

Leesbro63 wrote: Fri Oct 16, 2020 10:01 am To me it's fraud. If you have $5M in a taxable account generating no dividends or interest, and nothing else, you legally have zero income. Even if you withdraw from this account, it's still not income. The exception would be, I guess, to whatever extent you report capital gains, that would be income.
Credit card issuers often have a definition of income. Different issuers use different wordings. Under many definitions, income includes funds you would reasonably expect to have available to service the credit card debt.
Horsefly
Posts: 616
Joined: Sat Oct 24, 2015 8:13 am
Location: Colorado, mostly

Re: What's Your Credit Card Rewards Strategy?

Post by Horsefly »

TravelGeek wrote: Fri Oct 16, 2020 10:53 am I have generally been in the “I report whatever income appears on my tax return” because that is clearly defendable with a piece of paper if Chase or Amex want to do a financial review. It also has been “enough” for my needs.
I guess I could have used my AGI from my tax return. Although my pension is only $30K as I said, the dividends on my taxable account (which are all reinvested) and my Roth conversions put my AGI well over $200K. So I think using your tax return is less honest than using a SWR on your investments. What's on your tax return gives no indication of how much debt you could pay back, because it can easily be mostly income that never is available for you to spend. That is certainly the case for me. However, my investments really do represent my ability to pay debt.
Leesbro63
Posts: 6809
Joined: Mon Nov 08, 2010 4:36 pm

Re: What's Your Credit Card Rewards Strategy?

Post by Leesbro63 »

Horsefly wrote: Fri Oct 16, 2020 1:28 pm
TravelGeek wrote: Fri Oct 16, 2020 10:53 am I have generally been in the “I report whatever income appears on my tax return” because that is clearly defendable with a piece of paper if Chase or Amex want to do a financial review. It also has been “enough” for my needs.
I guess I could have used my AGI from my tax return. Although my pension is only $30K as I said, the dividends on my taxable account (which are all reinvested) and my Roth conversions put my AGI well over $200K. So I think using your tax return is less honest than using a SWR on your investments. What's on your tax return gives no indication of how much debt you could pay back, because it can easily be mostly income that never is available for you to spend. That is certainly the case for me. However, my investments really do represent my ability to pay debt.
Might actually be less honest, yet probably more legally defensible. Most juries and probably even judges won’t understand “my withdrawal rate is 4%, your honor”. They won’t understand the nuances of the tax return either. But if it’s on the return, it’s understood to be “the real number” (unless and until disallowed by the IRS).
tj
Posts: 3683
Joined: Thu Dec 24, 2009 12:10 am

Re: What's Your Credit Card Rewards Strategy?

Post by tj »

Leesbro63 wrote: Fri Oct 16, 2020 2:17 pm
Horsefly wrote: Fri Oct 16, 2020 1:28 pm
TravelGeek wrote: Fri Oct 16, 2020 10:53 am I have generally been in the “I report whatever income appears on my tax return” because that is clearly defendable with a piece of paper if Chase or Amex want to do a financial review. It also has been “enough” for my needs.
I guess I could have used my AGI from my tax return. Although my pension is only $30K as I said, the dividends on my taxable account (which are all reinvested) and my Roth conversions put my AGI well over $200K. So I think using your tax return is less honest than using a SWR on your investments. What's on your tax return gives no indication of how much debt you could pay back, because it can easily be mostly income that never is available for you to spend. That is certainly the case for me. However, my investments really do represent my ability to pay debt.
Might actually be less honest, yet probably more legally defensible. Most juries and probably even judges won’t understand “my withdrawal rate is 4%, your honor”. They won’t understand the nuances of the tax return either. But if it’s on the return, it’s understood to be “the real number” (unless and until disallowed by the IRS).
I am going to disagree with you. You are certainly allowed to use income sources that are not on your tax return, such as child support, VA benefits, disability insurance, etc. And yes, selling stocks, you would use the entire sale of the security, not just the "capital gain", because you are spending the entire proceed, not just the taxed portion.
Leesbro63
Posts: 6809
Joined: Mon Nov 08, 2010 4:36 pm

Re: What's Your Credit Card Rewards Strategy?

Post by Leesbro63 »

tj wrote: Fri Oct 16, 2020 2:27 pm
Leesbro63 wrote: Fri Oct 16, 2020 2:17 pm
Horsefly wrote: Fri Oct 16, 2020 1:28 pm
TravelGeek wrote: Fri Oct 16, 2020 10:53 am I have generally been in the “I report whatever income appears on my tax return” because that is clearly defendable with a piece of paper if Chase or Amex want to do a financial review. It also has been “enough” for my needs.
I guess I could have used my AGI from my tax return. Although my pension is only $30K as I said, the dividends on my taxable account (which are all reinvested) and my Roth conversions put my AGI well over $200K. So I think using your tax return is less honest than using a SWR on your investments. What's on your tax return gives no indication of how much debt you could pay back, because it can easily be mostly income that never is available for you to spend. That is certainly the case for me. However, my investments really do represent my ability to pay debt.
Might actually be less honest, yet probably more legally defensible. Most juries and probably even judges won’t understand “my withdrawal rate is 4%, your honor”. They won’t understand the nuances of the tax return either. But if it’s on the return, it’s understood to be “the real number” (unless and until disallowed by the IRS).
I am going to disagree with you. You are certainly allowed to use income sources that are not on your tax return, such as child support, VA benefits, disability insurance, etc. And yes, selling stocks, you would use the entire sale of the security, not just the "capital gain", because you are spending the entire proceed, not just the taxed portion.
I'm sure you are right. But for the average juror, that all probably will sound like "financial shenanigans", while the tax return is accepted as "your real income". There's "in theory" and "in reality".
Tattarrattat
Posts: 133
Joined: Wed Aug 19, 2020 6:05 pm

Re: What's Your Credit Card Rewards Strategy?

Post by Tattarrattat »

Leesbro63 wrote: Fri Oct 16, 2020 10:01 am
Horsefly wrote: Fri Oct 16, 2020 8:48 am Some time ago there was a discussion here (maybe in this thread but maybe not) regarding what a retiree can and should put down for annual income on a credit card application. I recall opinions were split: Many thought that you should only put what your real income is, while others thought you should put down what would conform to a 3-4% SWR from assets. It seemed like an important discussion, since many of us have very little real income but a big nest egg to draw from.

Yesterday I had an experience that seemed to answer the question. I had applied for the new Chase Freedom Flex, but got a letter from them a few days later saying that I needed to call them before they could make a decision. I had forgotten to unfreeze my credit report :oops: , which was the main thing I had to fix. I also had maxed out the total credit limit on my other Chase cards, so they needed to ask me how to redistribute my credit limits.

The interesting thing was when she asked me to verify my annual income. I decided that I would just be honest with her: It wouldn't bother me all that much if they decided to turn me down for this card, as I already have several. I told her that it depended on how they counted it. I explained that I have a small pension (~30K/yr), but that I have a substantial retirement nest egg which would allow me to take out much more than that annually for as long as I live. She literally said "let's use that number then". So I gave her a pretty large number, that I know to be around a 2.5% withdrawal rate. She didn't ask me for any details about how much I had in investments, or how I arrived at the number. She just plugged it in and after a couple of minutes on hold she said I was approved.

There are probably a couple of possibilities here. It could be that they are somewhat used to this discussion as they deal with retirees. It may even be in their script. On the other hand it may be that they don't really care how I come up with the number, and the rep is expected to give some value judgement on me and how I answered the question. Either way, I now have over $80K of credit limit with Chase (over $90K if you count my business card), and I'm sure I wouldn't get those limits if they only looked at my pension income.
I would NEVER do this. To me it's fraud. If you have $5M in a taxable account generating no dividends or interest, and nothing else, you legally have zero income. Even if you withdraw from this account, it's still not income. The exception would be, I guess, to whatever extent you report capital gains, that would be income.

On the other hand, if you have only $5M in an IRA and are beyond age 72, then I'd have no trouble using the RMD as my legal income, because that's how the tax man defines income. I think I'd even be OK if you withdrew MORE than the RMD as counting that "more amount" as income because, again, that's how the taxman does it. Even Roth IRA withdrawals, I think can be counted as legal income, although it's not taxable income.

On the other side of this mental and legal accounting dance, there are many of us who reinvest taxable dividends and interest, but don't consider it to be truly spendable income. Yet for purposes of applying for a loan/credit card, I'd have no trouble using this amount for the same reason as above...it's legally income.

Bottom line is that withdrawing arbitrarily from a pool of non-tax sheltered assets isn't really income.

No one cares how you obtain the credit as long as you pay as agreed, and the stuff will probably never be reviewed again. But if something goes wrong (you get into financial trouble and don't pay), they can and probably will review the entire application carefully and can use what you say to convince a judge or jury that you committed bank fraud.
Calling it "fraud" is excessive. It is perfectly normal and expected that a retiree will live off an annual percent of assets. It's basically a self funded pension. Nothing fraudulent about it. You can get a mortgage without any formal income based on the same idea. Banks have formulas for what a certain collection of assets can spin off. The bank rep on the phone likewise wasn't contributing to "fraud," they were using accepted financial principles.
Leesbro63
Posts: 6809
Joined: Mon Nov 08, 2010 4:36 pm

Re: What's Your Credit Card Rewards Strategy?

Post by Leesbro63 »

Tattarrattat wrote: Fri Oct 16, 2020 3:41 pm
Leesbro63 wrote: Fri Oct 16, 2020 10:01 am
Horsefly wrote: Fri Oct 16, 2020 8:48 am Some time ago there was a discussion here (maybe in this thread but maybe not) regarding what a retiree can and should put down for annual income on a credit card application. I recall opinions were split: Many thought that you should only put what your real income is, while others thought you should put down what would conform to a 3-4% SWR from assets. It seemed like an important discussion, since many of us have very little real income but a big nest egg to draw from.

Yesterday I had an experience that seemed to answer the question. I had applied for the new Chase Freedom Flex, but got a letter from them a few days later saying that I needed to call them before they could make a decision. I had forgotten to unfreeze my credit report :oops: , which was the main thing I had to fix. I also had maxed out the total credit limit on my other Chase cards, so they needed to ask me how to redistribute my credit limits.

The interesting thing was when she asked me to verify my annual income. I decided that I would just be honest with her: It wouldn't bother me all that much if they decided to turn me down for this card, as I already have several. I told her that it depended on how they counted it. I explained that I have a small pension (~30K/yr), but that I have a substantial retirement nest egg which would allow me to take out much more than that annually for as long as I live. She literally said "let's use that number then". So I gave her a pretty large number, that I know to be around a 2.5% withdrawal rate. She didn't ask me for any details about how much I had in investments, or how I arrived at the number. She just plugged it in and after a couple of minutes on hold she said I was approved.

There are probably a couple of possibilities here. It could be that they are somewhat used to this discussion as they deal with retirees. It may even be in their script. On the other hand it may be that they don't really care how I come up with the number, and the rep is expected to give some value judgement on me and how I answered the question. Either way, I now have over $80K of credit limit with Chase (over $90K if you count my business card), and I'm sure I wouldn't get those limits if they only looked at my pension income.
I would NEVER do this. To me it's fraud. If you have $5M in a taxable account generating no dividends or interest, and nothing else, you legally have zero income. Even if you withdraw from this account, it's still not income. The exception would be, I guess, to whatever extent you report capital gains, that would be income.

On the other hand, if you have only $5M in an IRA and are beyond age 72, then I'd have no trouble using the RMD as my legal income, because that's how the tax man defines income. I think I'd even be OK if you withdrew MORE than the RMD as counting that "more amount" as income because, again, that's how the taxman does it. Even Roth IRA withdrawals, I think can be counted as legal income, although it's not taxable income.

On the other side of this mental and legal accounting dance, there are many of us who reinvest taxable dividends and interest, but don't consider it to be truly spendable income. Yet for purposes of applying for a loan/credit card, I'd have no trouble using this amount for the same reason as above...it's legally income.

Bottom line is that withdrawing arbitrarily from a pool of non-tax sheltered assets isn't really income.

No one cares how you obtain the credit as long as you pay as agreed, and the stuff will probably never be reviewed again. But if something goes wrong (you get into financial trouble and don't pay), they can and probably will review the entire application carefully and can use what you say to convince a judge or jury that you committed bank fraud.
Calling it "fraud" is excessive. It is perfectly normal and expected that a retiree will live off an annual percent of assets. It's basically a self funded pension. Nothing fraudulent about it. You can get a mortgage without any formal income based on the same idea. Banks have formulas for what a certain collection of assets can spin off. The bank rep on the phone likewise wasn't contributing to "fraud," they were using accepted financial principles.
Fair enough. Maybe calling it “fraud” IS excessive here. I stand corrected.
Horsefly
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Re: What's Your Credit Card Rewards Strategy?

Post by Horsefly »

Leesbro63 wrote: Fri Oct 16, 2020 2:17 pm
Horsefly wrote: Fri Oct 16, 2020 1:28 pm
TravelGeek wrote: Fri Oct 16, 2020 10:53 am I have generally been in the “I report whatever income appears on my tax return” because that is clearly defendable with a piece of paper if Chase or Amex want to do a financial review. It also has been “enough” for my needs.
I guess I could have used my AGI from my tax return. Although my pension is only $30K as I said, the dividends on my taxable account (which are all reinvested) and my Roth conversions put my AGI well over $200K. So I think using your tax return is less honest than using a SWR on your investments. What's on your tax return gives no indication of how much debt you could pay back, because it can easily be mostly income that never is available for you to spend. That is certainly the case for me. However, my investments really do represent my ability to pay debt.
Might actually be less honest, yet probably more legally defensible. Most juries and probably even judges won’t understand “my withdrawal rate is 4%, your honor”. They won’t understand the nuances of the tax return either. But if it’s on the return, it’s understood to be “the real number” (unless and until disallowed by the IRS).
I think all this discussion of judges and juries is a bit over the top for this subject. Do any of us really think a DA or some police force is going to come after anyone for how much they put down as income on a credit card application? What agency or office would do this pursuit? FBI? State police?

I think if a credit card company decides to take action themselves, the action will be to just close your account. Heck, they don't even pursue people who commit fraud in using a card. I know, because I essentially handed them the name and address of the person who fraudulently used my card number for a $4000 charge. They just wrote it off and removed the charge from my bill.
TravelGeek
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Re: What's Your Credit Card Rewards Strategy?

Post by TravelGeek »

Leesbro63 wrote: Fri Oct 16, 2020 10:56 am To amend my earlier thinking...as I've had more time to ponder this...I think if you report an "income" that is a low fraction of your nest egg..."low SWR"...say 4% or even 5% or lower, a judge or jury could be probably be persuaded to agree that you have created your own income pension and did not make misleading claims in order to obtain bank credit.
I am not concerned about convincing judges and juries. I am trying to make sure that the number I provide on an application survives a review by a credit analyst, either during the initial application review or during a dreaded “financial review”. It’s unlikely that you will be given an opportunity to explain or argue about safe withdrawal rates. Amex, for example, will request a copy of your tax return. E.g., from TPG:

“... in most cases Amex will ask you to fill out a form 4506T, which authorizes Amex to retrieve your tax information from the IRS. The first person I spoke to, who has survived a total of four financial reviews (two each for him and his wife) explained that Amex will take the adjusted gross income (AGI) on your tax return and use it to reevaluate your credit card application in place of the income you put. If you were honest about your income, as you always should be, this shouldn’t create any problems at all.”

https://thepointsguy.com/guide/understa ... l-reviews/

I have never gone through this myself (with Amex or any other bank), but there are posts on FT where people have discussed this, and it seems generally you either provide the 4506T or you have your accounts closed.

I am not saying that this makes sense for incomes of (early) retirees like myself but it is what it is.
Horsefly
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Re: What's Your Credit Card Rewards Strategy?

Post by Horsefly »

TravelGeek wrote: Fri Oct 16, 2020 9:33 pm
Leesbro63 wrote: Fri Oct 16, 2020 10:56 am To amend my earlier thinking...as I've had more time to ponder this...I think if you report an "income" that is a low fraction of your nest egg..."low SWR"...say 4% or even 5% or lower, a judge or jury could be probably be persuaded to agree that you have created your own income pension and did not make misleading claims in order to obtain bank credit.
I am not concerned about convincing judges and juries. I am trying to make sure that the number I provide on an application survives a review by a credit analyst, either during the initial application review or during a dreaded “financial review”. It’s unlikely that you will be given an opportunity to explain or argue about safe withdrawal rates. Amex, for example, will request a copy of your tax return. E.g., from TPG:

“... in most cases Amex will ask you to fill out a form 4506T, which authorizes Amex to retrieve your tax information from the IRS. The first person I spoke to, who has survived a total of four financial reviews (two each for him and his wife) explained that Amex will take the adjusted gross income (AGI) on your tax return and use it to reevaluate your credit card application in place of the income you put. If you were honest about your income, as you always should be, this shouldn’t create any problems at all.”

https://thepointsguy.com/guide/understa ... l-reviews/

I have never gone through this myself (with Amex or any other bank), but there are posts on FT where people have discussed this, and it seems generally you either provide the 4506T or you have your accounts closed.

I am not saying that this makes sense for incomes of (early) retirees like myself but it is what it is.
The article you are linking to is about how Amex does account reviews. Nothing to do with applications. In fact, it is something that Amex does only if they already suspect you of committing fraud (bust-out fraud, specifically). Not easy for us normal people to look like we are doing a bust-out. I don't think that is really comparable to what is being discussed: your stated income for the purposes of applying for credit.

Besides - like I already said - if they want to use my AGI off of my taxes, that is already much higher than the income I'm stating based on my conservative SWR. Very little of the AGI on my taxes is available for me to use to pay off my credit cards, but if that is the logic they want to use, it is a poor reflection on them.
MikeG62
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Re: What's Your Credit Card Rewards Strategy?

Post by MikeG62 »

fuddbogle wrote: Fri Oct 16, 2020 10:33 am Here's more - from first page summary.

The final rule amends Regulation Z to remove the requirement that issuers consider the consumer’s independent ability to pay for applicants who are 21 or older, and permits issuers to consider income and assets to which such consumers have a reasonable expectation of access.

Just be honest with what you could reasonably use and you'll be fine (legally).

https://files.consumerfinance.gov/f/201 ... l-rule.pdf
This is where I come out as well.
Real Knowledge Comes Only From Experience
TravelGeek
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Re: What's Your Credit Card Rewards Strategy?

Post by TravelGeek »

Horsefly wrote: Fri Oct 16, 2020 10:59 pm The article you are linking to is about how Amex does account reviews. Nothing to do with applications.
It is relevant because (re-read the quote) Amex will re-evaluate the information you provided in your applications.

And FRs can be triggered by a variety of causes. They are rare, but I still wouldn’t want to risk having my accounts closed.

Also, there are are reports of Amex asking for the same 4506-T when reviewing a new credit application. E.g.,

https://ficoforums.myfico.com/t5/Credit ... -p/5574855
Besides - like I already said - if they want to use my AGI off of my taxes, that is already much higher than the income I'm stating based on my conservative SWR. Very little of the AGI on my taxes is available for me to use to pay off my credit cards, but if that is the logic they want to use, it is a poor reflection on them.
Agreed, it doesn’t make a ton of sense to me to robotically use AGI, but I don’t run Amex ;)

But many people are having the opposite case. Low AGI, higher potential SWR.
JackoC
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Re: What's Your Credit Card Rewards Strategy?

Post by JackoC »

TravelGeek wrote: Fri Oct 16, 2020 9:33 pm
Leesbro63 wrote: Fri Oct 16, 2020 10:56 am To amend my earlier thinking...as I've had more time to ponder this...I think if you report an "income" that is a low fraction of your nest egg..."low SWR"...say 4% or even 5% or lower, a judge or jury could be probably be persuaded to agree that you have created your own income pension and did not make misleading claims in order to obtain bank credit.
I am not concerned about convincing judges and juries. I am trying to make sure that the number I provide on an application survives a review by a credit analyst, either during the initial application review or during a dreaded “financial review”. It’s unlikely that you will be given an opportunity to explain or argue about safe withdrawal rates. Amex, for example, will request a copy of your tax return. E.g., from TPG:

“... in most cases Amex will ask you to fill out a form 4506T, which authorizes Amex to retrieve your tax information from the IRS. The first person I spoke to, who has survived a total of four financial reviews (two each for him and his wife) explained that Amex will take the adjusted gross income (AGI) on your tax return and use it to reevaluate your credit card application in place of the income you put. ...

I have never gone through this myself (with Amex or any other bank), but there are posts on FT where people have discussed this, and it seems generally you either provide the 4506T or you have your accounts closed.

I am not saying that this makes sense for incomes of (early) retirees like myself but it is what it is.
The AGI part is interesting. I put line 7a total income, plus line 2a, tax exempt income. In part because I recall some banks asking for 'total income' (not in reference to a particular 1040 line) with no indication they want you to subtract eg. HSA contributions, and sometimes I recall them also having lines for non-taxable income. Anyway I don't think it's worth the trouble of concocting some 'fair' estimate of my income that's not on my 1040, not that I'm worried about a 'fraud' charge. But it would actually be kind of strange if they strictly required a particular 1040 form number and didn't just ask for that number. If they just said 'give us line 8b (AGI) from your last 1040' in the first place, I would. :happy

Nor would I generally care if a particular bank closed my accounts if they didn't all do it. The exception might be BOA, but I've had pretty long relationship with them never missed or late on anything (with anyone actually) so doesn't seem likely. Amex is my oldest CC account so I'd rather it not go away, and that's why I keep my old Blue Cash on life support with a small purchase every few months but doesn't offer real value as a rewards card now. Nor does Amex Hilton points card I got for the bonus, it doesn't provide as much ongoing real value relative to 3.5% cash on travel with BOA PR, 7 points per $ on Hilton. *Can* you get >$.005/point at Hilton, yes, sometimes considerably more, but only by picking and choosing, and it tends to be when the Hilton $ price is high and more likely you could have gotten better value shopping around for another hotel with a better $ price. This is the problem with points systems generally IMO, for airline tickets too: you can get tunnel vision as to what value you're really getting. Whereas cash is cash: the BOA/Merrill PR+multiple-CR card line up at Platinum Honors level is the best CC strategy for us.
TravelGeek
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Re: What's Your Credit Card Rewards Strategy?

Post by TravelGeek »

JackoC wrote: Sat Oct 17, 2020 4:01 pm Nor would I generally care if a particular bank closed my accounts if they didn't all do it. The exception might be BOA, but I've had pretty long relationship with them never missed or late on anything (with anyone actually) so doesn't seem likely.
I very much value my relationships with Chase and Amex. Not every card equally, but overall they are where most of my spend goes and where most of my benefits come from.

If Barclays, Citi, US Bank or BofA decided to close my accounts, I would be less upset (though ultimately if I didn’t want to keep those cards I would (and sometimes have) just close the accounts myself.
JBTX
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Re: What's Your Credit Card Rewards Strategy?

Post by JBTX »

When helping my daughter apply for a couple of cards, it really wasn't clear what to use. She changes jobs a lot, then doesn't work, then gets another job. We still provide some support.

In some of the applications it explicitly says that support from other sources can be counted. Ultimately we figured out a number that was reasonably plausible but not too high but not so low as to get rejected.

I'd have the same issue with business cards. A few years ago I had 6 figures. Then half that. Then a few thousand, then nothing. But there's always a possibility that I could have more.

I have no idea what the court of law references in here are for. That isn't going to happen. As long as you come up with a good faith justifiable number you should be fine.
Seasonal
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Re: What's Your Credit Card Rewards Strategy?

Post by Seasonal »

Here's some of the law on the subject:

"Card issuers must establish and maintain reasonable written policies and procedures to consider the consumer's ability to make the required minimum payments under the terms of the account based on a consumer's income or assets and a consumer's current obligations. Reasonable policies and procedures include treating any income and assets to which the consumer has a reasonable expectation of access as the consumer's income or assets, or limiting consideration of the consumer's income or assets to the consumer's independent income and assets. Reasonable policies and procedures also include consideration of at least one of the following: The ratio of debt obligations to income; the ratio of debt obligations to assets; or the income the consumer will have after paying debt obligations. It would be unreasonable for a card issuer not to review any information about a consumer's income or assets and current obligations, or to issue a credit card to a consumer who does not have any income or assets."

https://www.law.cornell.edu/cfr/text/12/1026.51
TravelGeek
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Re: What's Your Credit Card Rewards Strategy?

Post by TravelGeek »

I am sure it’s going to pop up in another thread somewhere, but FYI, Chase just introduced 3X/2X on groceries for CSR/CSP:

https://www.doctorofcredit.com/chase-sa ... l-options/

Valid: 11/1/2020 - 4/30/2021, capped at $1000 per month.
Ron Ronnerson
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Re: What's Your Credit Card Rewards Strategy?

Post by Ron Ronnerson »

TravelGeek wrote: Tue Oct 20, 2020 9:14 am I am sure it’s going to pop up in another thread somewhere, but FYI, Chase just introduced 3X/2X on groceries for CSR/CSP:

https://www.doctorofcredit.com/chase-sa ... l-options/

Valid: 11/1/2020 - 4/30/2021, capped at $1000 per month.
Thanks for sharing this news!
Da5id
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Re: What's Your Credit Card Rewards Strategy?

Post by Da5id »

Ron Ronnerson wrote: Tue Oct 20, 2020 9:34 am
TravelGeek wrote: Tue Oct 20, 2020 9:14 am I am sure it’s going to pop up in another thread somewhere, but FYI, Chase just introduced 3X/2X on groceries for CSR/CSP:

https://www.doctorofcredit.com/chase-sa ... l-options/

Valid: 11/1/2020 - 4/30/2021, capped at $1000 per month.
Thanks for sharing this news!
Yes, thanks! Chase has NOT been good at communicating temporary special CSR features to me. Maybe I'm just in the mode of tuning out mail/email from Chase, but I've found out about the various special CSR features they've added only through bogleheads and other online sources...
Last edited by Da5id on Tue Oct 20, 2020 11:23 am, edited 1 time in total.
TravelGeek
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Re: What's Your Credit Card Rewards Strategy?

Post by TravelGeek »

Da5id wrote: Tue Oct 20, 2020 10:25 am
Yes, thanks! Chase has NOT been good at communicating temporary special CSR features to me. Maybe I'm just in the mode of tuning mail/email from Chase, but I've found out about the various special CSR features they've added only through bogleheads and other online sources...
Yes, I have seen promos (temporary extra points) mentioned on DoC weeks before I received email from Chase about it.
Last edited by TravelGeek on Tue Oct 20, 2020 1:33 pm, edited 1 time in total.
Ryzen
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Re: What's Your Credit Card Rewards Strategy?

Post by Ryzen »

Leesbro63 wrote: Fri Oct 16, 2020 2:43 pm
tj wrote: Fri Oct 16, 2020 2:27 pm
Leesbro63 wrote: Fri Oct 16, 2020 2:17 pm
Horsefly wrote: Fri Oct 16, 2020 1:28 pm
TravelGeek wrote: Fri Oct 16, 2020 10:53 am I have generally been in the “I report whatever income appears on my tax return” because that is clearly defendable with a piece of paper if Chase or Amex want to do a financial review. It also has been “enough” for my needs.
I guess I could have used my AGI from my tax return. Although my pension is only $30K as I said, the dividends on my taxable account (which are all reinvested) and my Roth conversions put my AGI well over $200K. So I think using your tax return is less honest than using a SWR on your investments. What's on your tax return gives no indication of how much debt you could pay back, because it can easily be mostly income that never is available for you to spend. That is certainly the case for me. However, my investments really do represent my ability to pay debt.
Might actually be less honest, yet probably more legally defensible. Most juries and probably even judges won’t understand “my withdrawal rate is 4%, your honor”. They won’t understand the nuances of the tax return either. But if it’s on the return, it’s understood to be “the real number” (unless and until disallowed by the IRS).
I am going to disagree with you. You are certainly allowed to use income sources that are not on your tax return, such as child support, VA benefits, disability insurance, etc. And yes, selling stocks, you would use the entire sale of the security, not just the "capital gain", because you are spending the entire proceed, not just the taxed portion.
I'm sure you are right. But for the average juror, that all probably will sound like "financial shenanigans", while the tax return is accepted as "your real income". There's "in theory" and "in reality".
Moot point. Any dispute would go to mandatory arbitration per the agreement with you and the card issuer. Plus you are being way to paranoid about this.

I would not provide tax returns to a credit card company as part of a financial review. There are plenty of good cards out there, I am not married to any one issuer.
Leesbro63
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Re: What's Your Credit Card Rewards Strategy?

Post by Leesbro63 »

Ryzen wrote: Tue Oct 20, 2020 12:00 pm
Leesbro63 wrote: Fri Oct 16, 2020 2:43 pm
tj wrote: Fri Oct 16, 2020 2:27 pm
Leesbro63 wrote: Fri Oct 16, 2020 2:17 pm
Horsefly wrote: Fri Oct 16, 2020 1:28 pm

I guess I could have used my AGI from my tax return. Although my pension is only $30K as I said, the dividends on my taxable account (which are all reinvested) and my Roth conversions put my AGI well over $200K. So I think using your tax return is less honest than using a SWR on your investments. What's on your tax return gives no indication of how much debt you could pay back, because it can easily be mostly income that never is available for you to spend. That is certainly the case for me. However, my investments really do represent my ability to pay debt.
Might actually be less honest, yet probably more legally defensible. Most juries and probably even judges won’t understand “my withdrawal rate is 4%, your honor”. They won’t understand the nuances of the tax return either. But if it’s on the return, it’s understood to be “the real number” (unless and until disallowed by the IRS).
I am going to disagree with you. You are certainly allowed to use income sources that are not on your tax return, such as child support, VA benefits, disability insurance, etc. And yes, selling stocks, you would use the entire sale of the security, not just the "capital gain", because you are spending the entire proceed, not just the taxed portion.
I'm sure you are right. But for the average juror, that all probably will sound like "financial shenanigans", while the tax return is accepted as "your real income". There's "in theory" and "in reality".
Moot point. Any dispute would go to mandatory arbitration per the agreement with you and the card issuer. Plus you are being way to paranoid about this.

I would not provide tax returns to a credit card company as part of a financial review. There are plenty of good cards out there, I am not married to any one issuer.
I'm not talking about a "dispute". I'm talking about what happens if someone loads up a credit card and, not too long after, files bankruptcy or otherwise does not pay the card. How is this different than if I borrow money from a bank and don't pay. Won't they then review the initial application for fraud?
Ron Ronnerson
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Re: What's Your Credit Card Rewards Strategy?

Post by Ron Ronnerson »

TravelGeek wrote: Tue Oct 20, 2020 10:40 am
Da5id wrote: Tue Oct 20, 2020 10:25 am
Yes, thanks! Chase has NOT been good at communicating temporary special CSR features to me. Maybe I'm just in the mode of tuning mail/email from Chase, but I've found out about the various special CSR features they've added only through bogleheads and other online sources...
Yes, I have seen promos (temporary extra points) mentioned on DoC Werks before I received email from Chase about it.
Same here. Chase could do a much better job of communicating these promos.
Da5id
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Re: What's Your Credit Card Rewards Strategy?

Post by Da5id »

I had a Capital One card whose fee had come due. They actually let me cancel it without talking to a person, which is a first for me. Nice to not have to go through the "why are you cancelling" discussion for a card I have for the bonus only anyway. Would have been an easy discussion this time, "I'm not travelling" seems like a good answer.
madbrain
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Re: What's Your Credit Card Rewards Strategy?

Post by madbrain »

dodecahedron wrote: Mon Sep 28, 2020 4:58 pm
deanmoriarty wrote: Sun Sep 27, 2020 8:12 am For a couple years now, I’ve been using three BofA Cash Rewards cards, and one BofA Travel rewards card, all no annual fee cards, and I get these rewards, all in monthly effective cash back:

- 5.25% on dining/bars
- 5.25% on travel
- 5.25% on online
- 3.5% on groceries (including Costco!)
- 2.625% on everything else (and no international fee)
Use a Cash Rewards card with category set to online to buy Costco gift cards online and you will get 5.25% cash back on your Costco purchases. (This strategy also works at some other grocery stores. Just check their websites to see if they sell gift cards online.)
Interesting. My Bank of America Cash Rewards card, opened in August 2019, is a MasterCard, so I can't use it at Costco at all, as they only take VISA.
I called to make a "network change request". Using Costco gift cards and tracking them is a bit of a pain, and you lose whatever benefits the credit card offers, such as extended warranty, which I guess don't make sense strictly on groceries, but my Costco receipts usually have other items that can benefit from them.
JackoC
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Re: What's Your Credit Card Rewards Strategy?

Post by JackoC »

madbrain wrote: Wed Oct 21, 2020 7:41 pm
dodecahedron wrote: Mon Sep 28, 2020 4:58 pm
deanmoriarty wrote: Sun Sep 27, 2020 8:12 am For a couple years now, I’ve been using three BofA Cash Rewards cards, and one BofA Travel rewards card, all no annual fee cards, and I get these rewards, all in monthly effective cash back:

- 5.25% on dining/bars
- 5.25% on travel
- 5.25% on online
- 3.5% on groceries (including Costco!)
- 2.625% on everything else (and no international fee)
Use a Cash Rewards card with category set to online to buy Costco gift cards online and you will get 5.25% cash back on your Costco purchases. (This strategy also works at some other grocery stores. Just check their websites to see if they sell gift cards online.)
Interesting. My Bank of America Cash Rewards card, opened in August 2019, is a MasterCard, so I can't use it at Costco at all, as they only take VISA.
I called to make a "network change request". Using Costco gift cards and tracking them is a bit of a pain, and you lose whatever benefits the credit card offers, such as extended warranty, which I guess don't make sense strictly on groceries, but my Costco receipts usually have other items that can benefit from them.
Given how rare it's been for us to make a warranty claim via a credit card (never that I recall), and also considering Costco often offers its own supplemental warranty on big ticket items (at no additional charge as $120/yr member, at least), seems to us using CR card to buy Costco Shop Cards at 5.25% is better than using the CR card directly for only 3.5% (both under the $2.5k/qtr limit per CR card). MC v Visa isn't an issue unless BOA has recently stopped approving multiple CR cards. We have 2 BOA CR Visa's and one MC. We use one of the Visa's at Costco if we run out of Shop Card capacity, as occasionally happens if I'm slow in reordering.
madbrain
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Re: What's Your Credit Card Rewards Strategy?

Post by madbrain »

JackoC wrote: Thu Oct 22, 2020 9:55 am Given how rare it's been for us to make a warranty claim via a credit card (never that I recall), and also considering Costco often offers its own supplemental warranty on big ticket items (at no additional charge as $120/yr member, at least), seems to us using CR card to buy Costco Shop Cards at 5.25% is better than using the CR card directly for only 3.5% (both under the $2.5k/qtr limit per CR card). MC v Visa isn't an issue unless BOA has recently stopped approving multiple CR cards. We have 2 BOA CR Visa's and one MC. We use one of the Visa's at Costco if we run out of Shop Card capacity, as occasionally happens if I'm slow in reordering.
It's not that rare for me. One large claim can easily wipe the differences between 5.25% and 3.5% for years.
I don't want to apply for multiple CR cards as I have opened several new accounts recently (elsewhere) and don't need the extra hit to my credit.
I don't see any reason to keep the MC as I don't know of any store that accepts only MC but not VISA, but Costco accepts only VISA and not MC.
tj
Posts: 3683
Joined: Thu Dec 24, 2009 12:10 am

Re: What's Your Credit Card Rewards Strategy?

Post by tj »

I have two CR visas and MLB mastercard. The MC I use for dining. One visa is for online purchases, the other for gas.
myleaf
Posts: 81
Joined: Tue Sep 20, 2016 10:55 am

Re: What's Your Credit Card Rewards Strategy?

Post by myleaf »

I recently signed up for a new BOA card similar to Cash Rewards, the Susan G. Koman For the Cure Visa Signature.

It has the same 3% categories as CR and also eligible for the Preferred Rewards bonus

With the Platinum honors Tier my strategy is:

BOA Travel Rewards - 2.65% (1.5% * 1.75) no Annual Fee

American Express - 6% groceries ($6000 limit / year) 95$ Annual Fee

BOA PR
Online Shopping 5.25% (3% * 1.75%) No Annual Fee
Grocery Stores + Wholesale Clubs 3.5% (2% * 1.75%)
Everything Else 1.75% (1% * 1.75%)

$2500 limit per quarter on combined Online Shopping + Grocery Stores & Wholsesale Clubs
Note 3% Categories can be changed monthly
(Online Shopping, Restaurants, Home Improvement, Gas, Travel, Drug Stores)

BOA SGKoman VISA

Restaurants 5.25% (3% * 1.75%) No Annual Fee
Grocery Stores + Wholesale Clubs 3.5% (2% * 1.75%)
Everything Else 1.75% (1% * 1.75%)

$2500 limit per quarter on combined Online Shopping + Grocery Stores & Wholsesale Clubs
Note 3% Categories can be changed monthly
(Online Shopping, Restaurants, Home Improvement, Gas, Travel, Drug Stores)

Amazon Prime Rewards Visa - 5% Amazon
"Never met an electron I did not like"
myleaf
Posts: 81
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Re: What's Your Credit Card Rewards Strategy?

Post by myleaf »

Forgot to Include:

Costco Visa 4% Gas $7000 per year No Annual Fee
3% Restaurant Travel
2% Costco
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EnjoyIt
Posts: 4928
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Re: What's Your Credit Card Rewards Strategy?

Post by EnjoyIt »

Here is the best but most complex plan I can think of:
Hold the chase sapphire reserve for the 1.5% return on points.

Groceries: Chase flex for 7.5% back for the next year
Amazon: chase ink amazon gift cards bought at Office Depot 7.5%
Flights: chase flex for 7.5% When booked from chase portal
buying extended legroom using airline card for free luggage.
Hotels: 4.5% back using chase sapphire reserve using hotels.com though a cash back portal which gives cash back varying from 1% to as high as 10% flus every 10th night free.
Department stores: If the purchase is permanent with low risk of return use chase ink to purchase gift cards from Office Depot for 7.5% off. Otherwise if purchase is online Bank of America 5.25% cash back or in person Bank of America 2.65% cash back card
Gas: 4% Costco visa card

All other online and in person purchases using Bank of America 5.25% and 2.65% cash back options.

In all honesty I do not jump through all those gift card hoops and often times just go with the easiest option to save time, but I think the above is the most cost effective (not time cost effective) way to make purchases that I can think of.
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ZinCO
Posts: 125
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Re: What's Your Credit Card Rewards Strategy?

Post by ZinCO »

myleaf wrote: Fri Oct 23, 2020 8:44 am
BOA PR
Online Shopping 5.25% (3% * 1.75%) No Annual Fee
Grocery Stores + Wholesale Clubs 3.5% (2% * 1.75%)
Everything Else 1.75% (1% * 1.75%)

$2500 limit per quarter on combined Online Shopping + Grocery Stores & Wholsesale Clubs
Note 3% Categories can be changed monthly
(Online Shopping, Restaurants, Home Improvement, Gas, Travel, Drug Stores)
The PR doesn't have those categories, the CR does. As you noted the Susan G Koman card is really a CR.
myleaf
Posts: 81
Joined: Tue Sep 20, 2016 10:55 am

Re: What's Your Credit Card Rewards Strategy?

Post by myleaf »

Sorry meant BOA CR not BOA PR.
"Never met an electron I did not like"
spammagnet
Posts: 1161
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Re: What's Your Credit Card Rewards Strategy?

Post by spammagnet »

myleaf wrote: Fri Oct 23, 2020 8:44 am BOA PR
Online Shopping 5.25% (3% * 1.75%) No Annual Fee
Grocery Stores + Wholesale Clubs 3.5% (2% * 1.75%)
Everything Else 1.75% (1% * 1.75%)

$2500 limit per quarter on combined Online Shopping + Grocery Stores & Wholsesale Clubs
Note 3% Categories can be changed monthly
(Online Shopping, Restaurants, Home Improvement, Gas, Travel, Drug Stores)
I just bought a $5 Publix gift card from their web site using a BOA Cash Rewards card with the elective category set to online shopping. When it posted I confirmed it was recorded as an online transaction. I promptly bought a month's worth of cards. The result is 5.25% on groceries.

Unfortunately, Publix does not support adding gift cards as a payment method in their phone app. I keep the cards in my wallet and changed the nickname of the credit card in my Publix app to "USE GIFT CARDS!" as a reminder.

We have enough different cards that we won't exceed the $2,500 quarterly limit on any one card. That doesn't require extra work or cards in my wallet. Some are used only online with certain vendors (Amazon, Paypal or my phone's pay app) and I record those only once.
international001
Posts: 1639
Joined: Thu Feb 15, 2018 7:31 pm

Re: What's Your Credit Card Rewards Strategy?

Post by international001 »

deanmoriarty wrote: Sun Sep 27, 2020 8:12 am
- 5.25% on dining/bars
- 5.25% on travel
- 5.25% on online
- 3.5% on groceries (including Costco!)
- 2.625% on everything else (and no international fee)
Use the AAA visa signature for 5.25% travel and you can liberate one of the Cash Rewards for something else.
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FrugalProfessor
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Re: What's Your Credit Card Rewards Strategy?

Post by FrugalProfessor »

EnjoyIt wrote: Fri Oct 23, 2020 9:04 am Here is the best but most complex plan I can think of:
Hold the chase sapphire reserve for the 1.5% return on points.

Groceries: Chase flex for 7.5% back for the next year
Amazon: chase ink amazon gift cards bought at Office Depot 7.5%
Flights: chase flex for 7.5% When booked from chase portal
buying extended legroom using airline card for free luggage.
Hotels: 4.5% back using chase sapphire reserve using hotels.com though a cash back portal which gives cash back varying from 1% to as high as 10% flus every 10th night free.
Department stores: If the purchase is permanent with low risk of return use chase ink to purchase gift cards from Office Depot for 7.5% off. Otherwise if purchase is online Bank of America 5.25% cash back or in person Bank of America 2.65% cash back card
Gas: 4% Costco visa card

All other online and in person purchases using Bank of America 5.25% and 2.65% cash back options.

In all honesty I do not jump through all those gift card hoops and often times just go with the easiest option to save time, but I think the above is the most cost effective (not time cost effective) way to make purchases that I can think of.
When you buy gift cards from office depot, are you going to a physical store and handling physical cards? That seems like a big hassle.

I'm 100% on the BoA bandwagon, thanks, in large part, to this thread.

Using the strategies outlined in the below posts, I achieve the following:
* 5.25% cash back on most stuff (including Costco)
* 8.75% cash back at Walmart (and therefore, Sam's)
* 9.75% cash back at CVS. This is non-trivial because we have a high deductible plan and pay up to $5k/year on drugs.
* 2.625 on all else

Delivery of GC purchased at Raise.com is instantaneous, especially if you do the official Raise ones at the top of the page rather than the marketplace ones at the bottom of the page (which can take up to a few hours sometimes). With Walmart, I copy and paste the Raise GC card number and pin to my Walmart.com account in less than a minute. With CVS, I print off the gift card voucher. It's not much of a hassle to eek out another 3-4% cash back on top of the already-great BoA strategy.

Relevant posts:
* https://frugalprofessor.com/boa-raise-c ... g-savings/
* https://frugalprofessor.com/another-boa ... ency-post/
* https://frugalprofessor.com/best-credit ... 9-edition/
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